Waterdrop Inc. — Call Transcript 2025

Morning, everyone. This is Tracy Li from WaterDrop Investor Relations. It's my pleasure to welcome everyone to WaterDrop's Third Quarter 2025 earnings conference call. All participants are in a listen-only mode in our English line. As a reminder, today's conference is being recorded. Please note that the discussion today will concentrate on forward-looking statements made under the Safe Harbor Provision of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements are subject to risk and uncertainties that may cause actual results to differ materially from our current expectations. Potential risks and uncertainties include, but are not limited to, those outlined in our public filing with SEC. The company does not entertain any obligation to update any forward-looking statement except as required in applicable law. Also, this call includes discussion of certain Non-GAAP matters. Please refer to our earnings release for a reconciliation between Non-GAAP and GAAP. Joining us today on the call are Mr. Yang Wei, Director and GM of Insurance Business, Ms. Xiaoying Xu, Head of Finance Department, and Ms. Jiao Yu, Board Secretary. We'll be happy to take some of the questions in the minutes line at the end of the conference call. In the third quarter, the company continued its growth trend, with overall revenue reaching over CNY 970 million, 38.4% year-on-year. Meanwhile, AI played a significant role in enhancing business quality and efficiency, driving net profit attributable to the ordinary shareholders to about CNY 160 million, a year-on-year increase of 60.1%. For the first three quarters of 2025, the company's total revenue amounted to CNY 2.67 billion, up 23.1% year-on-year. Net profit attributable to ordinary shareholders reached about CNY 410 million, rising 51.9% compared to the same period last year. The company has maintained GAAP profitability for 15 consecutive quarters since the first quarter of 2022. By segments, backed by the full integration of AI, our insurtech business continued its solid performance, with operating profit reaching about CNY 180 million in this quarter, a year-on-year increase of 44.3%. The medical profiling platform maintained stable operations and has raised medical campaigns for a cumulative total of 3.61 million patients as of the end of this quarter. The digital clinical trial solution business continued to excel in project fulfillment, enrolling over 1,000 patients in one single quarter, demonstrating robust growth momentum. This quarter, we continued to invest in AI. As of the end of September, the company has developed 69 patent applications centered on large language models, including nine international filings. During this quarter, our intelligent chatbot has been upgraded to a new hybrid attention mechanism. This updated system can select the appropriate reasoning method more flexibly, making it better at understanding and handling long conversations. The inference throughput currently is double that of the original version. In a key move to systematically live our AI capabilities, we launched WaterDrop C-Point AI in late September, a low-code AI platform that empowers our employees to smoothly view and deploy tailored solutions for various tasks, such as marketing and customer service across the app, website, and WeChat official accounts. Going forward, we are also exploring its application in non-insurance areas, providing strong support for the company's growth. WaterDrop's grounded in sustainable development is dedicated to creating value for society. In this quarter, we updated our ESG matters, released the 2024 annual ESG report, and disclosed multiple new environmental data, and continue to enhance our ESG governance framework. In public welfare, as of September 30, 2025, WaterDrop Charity Platform has collaborated with 119 charities and launched more than 16,500 projects. Together with Guangzhou Civil Affairs Bureau, we established the WaterDrop Co-Health program, which allows patients in need to apply for assistance online and offline, providing an innovative model that integrates government acts and the individual campaigns. We extend our appreciation to our shareholders for their enduring trust and support. In early November, we completed our fourth cash dividend distribution since IPO, with a total payout of around $10.9 million. By the end of November 2025, we had repurchased approximately 58.1 million ADS in the open market, totaling 113 million. Building on our robust business performance, we are confident in exhibiting full-year revenue and profit guidance. Moving forward, we will leverage advancing AI technologies to drive integration and innovation across our operations, fueling sustainable long-term growth. Next, I will pass to Yang Wei to introduce the development of insurance business, which is great. Hi, everyone. This is Yang Wei. In the third quarter, our insurance business maintained significant growth momentum. Insurance-related revenue reached about CNY 870 million, increasing by 44.8% year-on-year and 17.8% quarter-on-quarter. The business achieved an operating profit margin of 20.3%. This quarter, we optimized our real-time identification capabilities in public traffic scenarios. At the data infrastructure level, we fully integrated the data links among advertising, operation, and risk control systems. The integration slashed our end-to-end decision latency to under 60 milliseconds. Better response speed allowed us to generate more comprehensive decision-making and perform precise stratification immediately upon receiving an advertising requirement, thereby enhancing the ability to identify and filter high-quality traffic. That proportion, we continue to increase through integration. We also match users with suitable coverage options based on their specific needs and payment capability and the payment capacity. Now, the entire system is deeply integrated with our corporate data lake and AI platform, including self-training and health updates to continually refine our marketing strategy. On the supply side, we continue to drive product innovation. In this quarter, we introduced Penta's Full Family Protection Plan, which covers up to nine family members under one single policy, and upgraded Guang Ying Xiao Leads to high-end medical insurance with an expanded network of quality private hospitals. For critical illness insurance, we further enriched our Shouhu GenAI series by introducing modular options tailored to diverse budget needs. We also upgraded the real Shouhu disability insurance series, which has achieved a comprehensive coverage ranging extensive protection. Pre-existing condition insurance contributed about CNY 400 million in FYP during this quarter, a year-on-year increase of 103.9%. On the service side, we deployed AI more widely, enhancing operational efficiency. We extended the rollout of AI Pro insurance module on our WeChat Mini program homepage. This LLM-powered module offers users real-time Q&A and personalized recommendations, driving a 36% sequential increase in facilitated FYP. In voice services, AI medical insurance experts continue to boost efficiency. In third quarter, it assisted in achieving an 82% increase in FYP compared to the Q2. In the WeCom service scenarios, the per-lead productivity of AI medical insurance experts in September doubled that of June. AI applications also continue to empower long-term insurance services. As of the end of this quarter, the knowledge base to AI Life Planner Copilot had cumulatively assisted in over 340,000 insurance product-related consultations. The underwriting assistant, Ku Yi Point AI, reduced the response time from underwriting cases for the traditional manual model of five minutes to one second. The AI super pre-sales assistant has consistently maintained higher APL than human agents. Beginning in September, the scenario has been fully transitioned to AI operations. In after-sales services, our AI customer service agent now can handle over 600,000 insurers in one month, solving 85% of online cases independently. At the end of September, we launched WaterDrop C-Point AI, a low-code platform that is accelerating the development of AI applications across multiple business scenarios. That concludes our insurance update in this quarter. Hi, I'm Li Zhiju. Now, I will walk you through the third quarter's progress in performing in healthcare sectors. As of September 30, 2025, approximately 485 million people had cumulative visibility, a total of 71.2 billion to 3.61 million patients through WaterDrop Medical Crowdfunding. In this third quarter, we focused on strengthening the campaign risk control matters. We extended core scenarios strategically, incorporating different agent modifications to our workflow, which boosted the efficiency of the review process. By analyzing donation visit data to identify structural patterns, advanced analysts now can refine the identification capabilities of our algorithm model. This, in turn, has improved automatic early warning systems to better detect and reduce fraud. Additionally, the platform continues to prioritize the transparency of campaign authenticity. This quarter, we fortified our special case review mechanism by fully decoding the course of the request review and potential usage response, with real-time display review timeline and the reviewers' satisfaction status. This now gives donors clear insight into how their contribution, how their donations are allocated and used. This matters have profoundly enhanced the transparency, rationality, and the traceability of funds distribution. And our healthcare business continues strong performance this quarter. The eFind platform expanded the collaboration network by partnering with 216 pharmaceutical and contract research organizations. Meanwhile, we initiated services for 125 new programs. For the first time, we successfully enrolled over 1,000 patients in one single quarter. Since its launch, the program has achieved accumulative enrollment of more than 13,000 patients. WaterDrop leveraged its massive patient database and elastic digital ability to expand collaboration projects in areas like psoriasis, tumors, and digestive tumors, accelerating the clinical development process of our partners. Notably, in the challenging field of gynecological tumors, quarterly enrollment increased by 130% compared to the previous full quarter average level. The company has also made significant strides in chronic disease. Building on its existing focus on skin disease, respiratory conditions, and diabetic hypertension, the company has expanded its disease coverage into the rheumatology and the immunology. Enhancing digital matching accuracy between patient database and the project library remains a key strategic focus for WaterDrop. This quarter, we upgraded our algorithm medical data structure matching, ensuring enabling thriving performance across multiple high-quality, high-difficulty projects. Through the ecosystem synergy and refined project operations, WaterDrop consistently delivers satisfactory fulfillment quality, striving to sustain order growth. As a result, the digital clinical trial solution income in the third quarter reached CNY 31.85 million, marking a 31.3% year-on-year increase. In the digital omnichannel marketing, we advanced LLM-powered applications in medical patient service scenarios, launching projects in patient health management, knowledge promotion, and digital humans. The company secured a three-year contract with a world-leading pharmaceutical for patient medicine, serving hundreds of thousands of patients and profoundly improving service efficiency and user experience. Now, I will hand over to Xiaoying Xu, our Head of Finance Department, to discuss our financial performance in this quarter. Hello, everyone. I will now walk you through our financial highlights for the third quarter of 2025. Before I go into details, please be reminded that all numbers quoted here will be non-GAAP, and please refer to our earnings release for detailed information on our financial performance on both the year-on-year and quarter-on-quarter basis, respectively. In the third quarter, the company reported total revenue of CNY 975 million, marking a year-on-year growth of 38.4%, reflecting a strong growth trajectory. By segment, our insurance business generated about CNY 870 million in revenue, at 44.8% year-on-year. Premium service fees excluded and at around CNY 65.66 million, remaining stable year-on-year. Digital clinical trial solutions contributed over CNY 31.85 million, with a year-on-year increase of 31.3%. Operating costs and expenses totaled approximately CNY 861 million, marking a year-on-year increase of 27.1%. This growth rate of operating costs was lower than the revenue growth, further boosting profitability. Operating costs for this quarter reached CNY 475 million, at 39.5% year-on-year, driven by CNY 56.7 million rise in cost of a referral and service fee, along with 32.4 million and 16.9 million increase in personnel costs and the cost of premium consultant fees. Sales and marketing expenses amounted to CNY 243 million, rising 40.3% year-on-year. This growth mainly because of the enhanced AI applications, which improved the user identification accuracy and the conversion rate. Based on this, we boosted our traffic investment, resulting in CNY 79 million year-on-year rise in the marketing expenses for the third quarter traffic channels. General and administrative expenses declined 23.7% year-on-year to CNY 84.7 million. Key factors include a CNY 15.6 million reduction in personal costs and the absence of last year's CNY 20.6 million impairment loss, which contributed to the delta decrease. The R&D expenses rose 10.2% to over CNY 58.3 million, with personal costs and cross-server expense and other technical support expenses increasing by CNY 3.2 million and CNY 2.7 million, respectively, compared to the same period of 2024. In this quarter, the company reported an operating profit of nearly CNY 114 million, marking a substantial year-on-year increase of 329.8%. Net profit attributable to the company's ordinary shareholders reached CNY 158 million, up 60.1% year-on-year. At the end of this period, the company held ample cash position of about CNY 3.61 billion. Net operating cash flow remained positive, providing firm financial support for business expansion and technological development. And in summary, during this quarter, we focused on refined management while achieving scale growth. Moving forward, the company will advance with greater productivity and a program and further strong acts to reach a new stage of development. And ladies and gentlemen, with that, we will conclude today's conference call. We do thank you for joining. Have a good time.

Speaker 1: Morning, everyone. This is Tracy Li from WaterDrop Investor Relations. It's my pleasure to welcome everyone to WaterDrop's Third Quarter 2025 earnings conference call. All participants are in a listen-only mode in our English line. As a reminder, today's conference is being recorded. Please note that the discussion today will concentrate on forward-looking statements made under the Safe Harbor Provision of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements are subject to risk and uncertainties that may cause actual results to differ materially from our current expectations. Potential risks and uncertainties include, but are not limited to, those outlined in our public filing with SEC. The company does not entertain any obligation to update any forward-looking statement except as required in applicable law. Also, this call includes discussion of certain Non-GAAP matters. Morning, everyone. morning everyone This is Tracy Li from WaterDrop Investor Relations. this is tracy li from waterdrop investor relations It's my pleasure to welcome everyone to WaterDrop's Third Quarter 2025 earnings conference call. it's my pleasure to welcome everyone to waterdrop's third quarter 2025 earnings conference call All participants are in a listen-only mode in our English line. all participants are in a listen-only mode in our english line As a reminder, today's conference is being recorded. as a reminder today's conference is being recorded Please note that the discussion today will concentrate on forward-looking statements made under the Safe Harbor Provision of the U.S. please note that the discussion today will concentrate on forward-looking statements made under the safe harbor provision of the u.s Private Securities Litigation Reform Act of 1995. private securities litigation reform act of 1995 Forward-looking statements are subject to risk and uncertainties that may cause actual results to differ materially from our current expectations. forward-looking statements are subject to risk and uncertainties that may cause actual results to differ materially from our current expectations Potential risks and uncertainties include, but are not limited to, those outlined in our public filing with SEC. potential risks and uncertainties include but are not limited to those outlined in our public filing with sec The company does not entertain any obligation to update any forward-looking statement except as required in applicable law. the company does not entertain any obligation to update any forward-looking statement except as required in applicable law Also, this call includes discussion of certain Non-GAAP matters. also this call includes discussion of certain non-gaap matters Please refer to our earnings release for a reconciliation between Non-GAAP and GAAP. Joining us today on the call are Mr. Yang Wei, Director and GM of Insurance Business, Ms. Xiaoying Xu, Head of Finance Department, and Ms. Jiao Yu, Board Secretary. We'll be happy to take some of the questions in the minutes line at the end of the conference call. In the third quarter, the company continued its growth trend, with overall revenue reaching over CNY 970 million, 38.4% year-on-year. Meanwhile, AI played a significant role in enhancing business quality and efficiency, driving net profit attributable to the ordinary shareholders to about CNY 160 million, a year-on-year increase of 60.1%. For the first three quarters of 2025, the company's total revenue amounted to CNY 2.67 billion, up 23.1% year-on-year. Please refer to our earnings release for a reconciliation between Non-GAAP and GAAP. please refer to our earnings release for a reconciliation between non-gaap and gaap Joining us today on the call are Mr. Yang Wei, Director and GM of Insurance Business, Ms. Xiaoying Xu , Head of Finance Department, and Ms. Jiao Yu, Board Secretary. joining us today on the call are mr yang wei director and gm of insurance business ms xiaoying xu head of finance department and ms jiao yu board secretary We'll be happy to take some of the questions in the minutes line at the end of the conference call. we'll be happy to take some of the questions in the minutes line at the end of the conference call In the third quarter, the company continued its growth trend, with overall revenue reaching over CNY 970 million, 38.4% year-on-year. in the third quarter the company continued its growth trend with overall revenue reaching over cny 970 million 38.4% year-on-year Meanwhile, AI played a significant role in enhancing business quality and efficiency, driving net profit attributable to the ordinary shareholders to about CNY 160 million, a year-on-year increase of 60.1%. meanwhile ai played a significant role in enhancing business quality and efficiency driving net profit attributable to the ordinary shareholders to about cny 160 million a year-on-year increase of 60.1% For the first three quarters of 2025, the company's total revenue amounted to CNY 2.67 billion, up 23.1% year-on-year. for the first three quarters of 2025 the company's total revenue amounted to cny 2.67 billion up 23.1% year-on-year Net profit attributable to ordinary shareholders reached about CNY 410 million, rising 51.9% compared to the same period last year. The company has maintained GAAP profitability for 15 consecutive quarters since the first quarter of 2022. By segments, backed by the full integration of AI, our insurtech business continued its solid performance, with operating profit reaching about CNY 180 million in this quarter, a year-on-year increase of 44.3%. The medical profiling platform maintained stable operations and has raised medical campaigns for a cumulative total of 3.61 million patients as of the end of this quarter. The digital clinical trial solution business continued to excel in project fulfillment, enrolling over 1,000 patients in one single quarter, demonstrating robust growth momentum. This quarter, we continued to invest in AI. As of the end of September, the company has developed 69 patent applications centered on large language models, including nine international filings. Net profit attributable to ordinary shareholders reached about CNY 410 million, rising 51.9% compared to the same period last year. net profit attributable to ordinary shareholders reached about cny 410 million rising 51.9% compared to the same period last year The company has maintained GAAP profitability for 15 consecutive quarters since the first quarter of 2022. the company has maintained gaap profitability for 15 consecutive quarters since the first quarter of 2022 By segments, backed by the full integration of AI, our insurtech business continued its solid performance, with operating profit reaching about CNY 180 million in this quarter, a year-on-year increase of 44.3%. by segments backed by the full integration of ai our insurtech business continued its solid performance with operating profit reaching about cny 180 million in this quarter a year-on-year increase of 44.3% The medical profiling platform maintained stable operations and has raised medical campaigns for a cumulative total of 3.61 million patients as of the end of this quarter. the medical profiling platform maintained stable operations and has raised medical campaigns for a cumulative total of 3.61 million patients as of the end of this quarter The digital clinical trial solution business continued to excel in project fulfillment, enrolling over 1,000 patients in one single quarter, demonstrating robust growth momentum. the digital clinical trial solution business continued to excel in project fulfillment enrolling over 1,000 patients in one single quarter demonstrating robust growth momentum This quarter, we continued to invest in AI. this quarter we continued to invest in ai As of the end of September, the company has developed 69 patent applications centered on large language models, including nine international filings. as of the end of september the company has developed 69 patent applications centered on large language models including nine international filings During this quarter, our intelligent chatbot has been upgraded to a new hybrid attention mechanism. This updated system can select the appropriate reasoning method more flexibly, making it better at understanding and handling long conversations. The inference throughput currently is double that of the original version. In a key move to systematically live our AI capabilities, we launched WaterDrop C-Point AI in late September, a low-code AI platform that empowers our employees to smoothly view and deploy tailored solutions for various tasks, such as marketing and customer service across the app, website, and WeChat official accounts. Going forward, we are also exploring its application in non-insurance areas, providing strong support for the company's growth. WaterDrop's grounded in sustainable development is dedicated to creating value for society. During this quarter, our intelligent chatbot has been upgraded to a new hybrid attention mechanism. during this quarter our intelligent chatbot has been upgraded to a new hybrid attention mechanism This updated system can select the appropriate reasoning method more flexibly, making it better at understanding and handling long conversations. this updated system can select the appropriate reasoning method more flexibly making it better at understanding and handling long conversations The inference throughput currently is double that of the original version. the inference throughput currently is double that of the original version In a key move to systematically live our AI capabilities, we launched WaterDrop C-Point AI in late September, a low-code AI platform that empowers our employees to smoothly view and deploy tailored solutions for various tasks, such as marketing and customer service across the app, website, and WeChat official accounts. in a key move to systematically live our ai capabilities we launched waterdrop c-point ai in late september a low-code ai platform that empowers our employees to smoothly view and deploy tailored solutions for various tasks such as marketing and customer service across the app website and wechat official accounts Going forward, we are also exploring its application in non-insurance areas, providing strong support for the company's growth. going forward we are also exploring its application in non-insurance areas providing strong support for the company's growth WaterDrop's grounded in sustainable development is dedicated to creating value for society. waterdrop's grounded in sustainable development is dedicated to creating value for society In this quarter, we updated our ESG matters, released the 2024 annual ESG report, and disclosed multiple new environmental data, and continue to enhance our ESG governance framework. In public welfare, as of September 30, 2025, WaterDrop Charity Platform has collaborated with 119 charities and launched more than 16,500 projects. Together with Guangzhou Civil Affairs Bureau, we established the WaterDrop Co-Health program, which allows patients in need to apply for assistance online and offline, providing an innovative model that integrates government acts and the individual campaigns. We extend our appreciation to our shareholders for their enduring trust and support. In early November, we completed our fourth cash dividend distribution since IPO, with a total payout of around $10.9 million. By the end of November 2025, we had repurchased approximately 58.1 million ADS in the open market, totaling 113 million. In this quarter, we updated our ESG matters, released the 2024 annual ESG report, and disclosed multiple new environmental data, and continue to enhance our ESG governance framework. in this quarter we updated our esg matters released the 2024 annual esg report and disclosed multiple new environmental data and continue to enhance our esg governance framework In public welfare, as of September 30, 2025, WaterDrop Charity Platform has collaborated with 119 charities and launched more than 16,500 projects. in public welfare as of september 30 2025 waterdrop charity platform has collaborated with 119 charities and launched more than 16,500 projects Together with Guangzhou Civil Affairs Bureau, we established the WaterDrop Co-Health program, which allows patients in need to apply for assistance online and offline, providing an innovative model that integrates government acts and the individual campaigns. together with guangzhou civil affairs bureau we established the waterdrop co-health program which allows patients in need to apply for assistance online and offline providing an innovative model that integrates government acts and the individual campaigns We extend our appreciation to our shareholders for their enduring trust and support. we extend our appreciation to our shareholders for their enduring trust and support In early November, we completed our fourth cash dividend distribution since IPO, with a total payout of around $10.9 million. in early november we completed our fourth cash dividend distribution since ipo with a total payout of around $10.9 million By the end of November 2025, we had repurchased approximately 58.1 million ADS in the open market, totaling 113 million. by the end of november 2025 we had repurchased approximately 58.1 million ads in the open market totaling 113 million Building on our robust business performance, we are confident in exhibiting full-year revenue and profit guidance. Moving forward, we will leverage advancing AI technologies to drive integration and innovation across our operations, fueling sustainable long-term growth. Next, I will pass to Yang Wei to introduce the development of insurance business, which is great. Building on our robust business performance, we are confident in exhibiting full-year revenue and profit guidance. building on our robust business performance we are confident in exhibiting full-year revenue and profit guidance Moving forward, we will leverage advancing AI technologies to drive integration and innovation across our operations, fueling sustainable long-term growth. moving forward we will leverage advancing ai technologies to drive integration and innovation across our operations fueling sustainable long-term growth Next, I will pass to Yang Wei to introduce the development of insurance business, which is great. next i will pass to yang wei to introduce the development of insurance business which is great

Speaker 3: Hi, everyone. This is Yang Wei. In the third quarter, our insurance business maintained significant growth momentum. Insurance-related revenue reached about CNY 870 million, increasing by 44.8% year-on-year and 17.8% quarter-on-quarter. The business achieved an operating profit margin of 20.3%. This quarter, we optimized our real-time identification capabilities in public traffic scenarios. At the data infrastructure level, we fully integrated the data links among advertising, operation, and risk control systems. The integration slashed our end-to-end decision latency to under 60 milliseconds. Hi, everyone. hi everyone This is Yang Wei. this is yang wei In the third quarter, our insurance business maintained significant growth momentum. in the third quarter our insurance business maintained significant growth momentum Insurance-related revenue reached about CNY 870 million, increasing by 44.8% year-on-year and 17.8% quarter-on-quarter. insurance-related revenue reached about cny 870 million increasing by 44.8% year-on-year and 17.8% quarter-on-quarter The business achieved an operating profit margin of 20.3%. the business achieved an operating profit margin of 20.3% This quarter, we optimized our real-time identification capabilities in public traffic scenarios. this quarter we optimized our real-time identification capabilities in public traffic scenarios At the data infrastructure level, we fully integrated the data links among advertising, operation, and risk control systems. at the data infrastructure level we fully integrated the data links among advertising operation and risk control systems The integration slashed our end-to-end decision latency to under 60 milliseconds. the integration slashed our end-to-end decision latency to under 60 milliseconds Better response speed allowed us to generate more comprehensive decision-making and perform precise stratification immediately upon receiving an advertising requirement, thereby enhancing the ability to identify and filter high-quality traffic. That proportion, we continue to increase through integration. We also match users with suitable coverage options based on their specific needs and payment capability and the payment capacity. Now, the entire system is deeply integrated with our corporate data lake and AI platform, including self-training and health updates to continually refine our marketing strategy. On the supply side, we continue to drive product innovation. In this quarter, we introduced Penta's Full Family Protection Plan, which covers up to nine family members under one single policy, and upgraded Guang Ying Xiao Leads to high-end medical insurance with an expanded network of quality private hospitals. Better response speed allowed us to generate more comprehensive decision-making and perform precise stratification immediately upon receiving an advertising requirement, thereby enhancing the ability to identify and filter high-quality traffic. better response speed allowed us to generate more comprehensive decision-making and perform precise stratification immediately upon receiving an advertising requirement thereby enhancing the ability to identify and filter high-quality traffic That proportion, we continue to increase through integration. that proportion we continue to increase through integration We also match users with suitable coverage options based on their specific needs and payment capability and the payment capacity. we also match users with suitable coverage options based on their specific needs and payment capability and the payment capacity Now, the entire system is deeply integrated with our corporate data lake and AI platform, including self-training and health updates to continually refine our marketing strategy. now the entire system is deeply integrated with our corporate data lake and ai platform including self-training and health updates to continually refine our marketing strategy On the supply side, we continue to drive product innovation. on the supply side we continue to drive product innovation In this quarter, we introduced Penta's Full Family Protection Plan, which covers up to nine family members under one single policy, and upgraded Guang Ying Xiao Leads to high-end medical insurance with an expanded network of quality private hospitals. in this quarter we introduced penta's full family protection plan which covers up to nine family members under one single policy and upgraded guang ying xiao leads to high-end medical insurance with an expanded network of quality private hospitals For critical illness insurance, we further enriched our Shouhu GenAI series by introducing modular options tailored to diverse budget needs. We also upgraded the real Shouhu disability insurance series, which has achieved a comprehensive coverage ranging extensive protection. Pre-existing condition insurance contributed about CNY 400 million in FYP during this quarter, a year-on-year increase of 103.9%. On the service side, we deployed AI more widely, enhancing operational efficiency. We extended the rollout of AI Pro insurance module on our WeChat Mini program homepage. This LLM-powered module offers users real-time Q&A and personalized recommendations, driving a 36% sequential increase in facilitated FYP. In voice services, AI medical insurance experts continue to boost efficiency. In third quarter, it assisted in achieving an 82% increase in FYP compared to the Q2. In the WeCom service scenarios, the per-lead productivity of AI medical insurance experts in September doubled that of June. For critical illness insurance, we further enriched our Shouhu GenAI series by introducing modular options tailored to diverse budget needs. for critical illness insurance we further enriched our shouhu genai series by introducing modular options tailored to diverse budget needs We also upgraded the real Shouhu disability insurance series, which has achieved a comprehensive coverage ranging extensive protection. we also upgraded the real shouhu disability insurance series which has achieved a comprehensive coverage ranging extensive protection Pre-existing condition insurance contributed about CNY 400 million in FYP during this quarter, a year-on-year increase of 103.9%. pre-existing condition insurance contributed about cny 400 million in fyp during this quarter a year-on-year increase of 103.9% On the service side, we deployed AI more widely, enhancing operational efficiency. on the service side we deployed ai more widely enhancing operational efficiency We extended the rollout of AI Pro insurance module on our WeChat Mini program homepage. we extended the rollout of ai pro insurance module on our wechat mini program homepage This LLM-powered module offers users real-time Q&A and personalized recommendations, driving a 36% sequential increase in facilitated FYP. this llm-powered module offers users real-time q&a and personalized recommendations driving a 36% sequential increase in facilitated fyp In voice services, AI medical insurance experts continue to boost efficiency. in voice services ai medical insurance experts continue to boost efficiency In third quarter, it assisted in achieving an 82% increase in FYP compared to the Q2. in third quarter it assisted in achieving an 82% increase in fyp compared to the q2 In the WeCom service scenarios, the per-lead productivity of AI medical insurance experts in September doubled that of June. in the wecom service scenarios the per-lead productivity of ai medical insurance experts in september doubled that of june AI applications also continue to empower long-term insurance services. As of the end of this quarter, the knowledge base to AI Life Planner Copilot had cumulatively assisted in over 340,000 insurance product-related consultations. The underwriting assistant, Ku Yi Point AI, reduced the response time from underwriting cases for the traditional manual model of five minutes to one second. The AI super pre-sales assistant has consistently maintained higher APL than human agents. Beginning in September, the scenario has been fully transitioned to AI operations. In after-sales services, our AI customer service agent now can handle over 600,000 insurers in one month, solving 85% of online cases independently. At the end of September, we launched WaterDrop C-Point AI, a low-code platform that is accelerating the development of AI applications across multiple business scenarios. That concludes our insurance update in this quarter. AI applications also continue to empower long-term insurance services. ai applications also continue to empower long-term insurance services As of the end of this quarter, the knowledge base to AI Life Planner Copilot had cumulatively assisted in over 340,000 insurance product-related consultations. as of the end of this quarter the knowledge base to ai life planner copilot had cumulatively assisted in over 340,000 insurance product-related consultations The underwriting assistant, Ku Yi Point AI, reduced the response time from underwriting cases for the traditional manual model of five minutes to one second. the underwriting assistant ku yi point ai reduced the response time from underwriting cases for the traditional manual model of five minutes to one second The AI super pre-sales assistant has consistently maintained higher APL than human agents. the ai super pre-sales assistant has consistently maintained higher apl than human agents Beginning in September, the scenario has been fully transitioned to AI operations. beginning in september the scenario has been fully transitioned to ai operations In after-sales services, our AI customer service agent now can handle over 600,000 insurers in one month, solving 85% of online cases independently. in after-sales services our ai customer service agent now can handle over 600,000 insurers in one month solving 85% of online cases independently At the end of September, we launched WaterDrop C-Point AI, a low-code platform that is accelerating the development of AI applications across multiple business scenarios. at the end of september we launched waterdrop c-point ai a low-code platform that is accelerating the development of ai applications across multiple business scenarios That concludes our insurance update in this quarter. that concludes our insurance update in this quarter

Speaker 2: Hi, I'm Li Zhiju. Hi, I'm Li Zhiju. hi i'm li zhiju Now, I will walk you through the third quarter's progress in performing in healthcare sectors. As of September 30, 2025, approximately 485 million people had cumulative visibility, a total of 71.2 billion to 3.61 million patients through WaterDrop Medical Crowdfunding. In this third quarter, we focused on strengthening the campaign risk control matters. We extended core scenarios strategically, incorporating different agent modifications to our workflow, which boosted the efficiency of the review process. By analyzing donation visit data to identify structural patterns, advanced analysts now can refine the identification capabilities of our algorithm model. This, in turn, has improved automatic early warning systems to better detect and reduce fraud. Additionally, the platform continues to prioritize the transparency of campaign authenticity. Now, I will walk you through the third quarter's progress in performing in healthcare sectors. now i will walk you through the third quarter's progress in performing in healthcare sectors As of September 30, 2025, approximately 485 million people had cumulative visibility, a total of 71.2 billion to 3.61 million patients through WaterDrop Medical Crowdfunding. as of september 30 2025 approximately 485 million people had cumulative visibility a total of 71.2 billion to 3.61 million patients through waterdrop medical crowdfunding In this third quarter, we focused on strengthening the campaign risk control matters. in this third quarter we focused on strengthening the campaign risk control matters We extended core scenarios strategically, incorporating different agent modifications to our workflow, which boosted the efficiency of the review process. we extended core scenarios strategically incorporating different agent modifications to our workflow which boosted the efficiency of the review process By analyzing donation visit data to identify structural patterns, advanced analysts now can refine the identification capabilities of our algorithm model. by analyzing donation visit data to identify structural patterns advanced analysts now can refine the identification capabilities of our algorithm model This, in turn, has improved automatic early warning systems to better detect and reduce fraud. this in turn has improved automatic early warning systems to better detect and reduce fraud Additionally, the platform continues to prioritize the transparency of campaign authenticity. additionally the platform continues to prioritize the transparency of campaign authenticity This quarter, we fortified our special case review mechanism by fully decoding the course of the request review and potential usage response, with real-time display review timeline and the reviewers' satisfaction status. This now gives donors clear insight into how their contribution, how their donations are allocated and used. This matters have profoundly enhanced the transparency, rationality, and the traceability of funds distribution. And our healthcare business continues strong performance this quarter. The eFind platform expanded the collaboration network by partnering with 216 pharmaceutical and contract research organizations. Meanwhile, we initiated services for 125 new programs. For the first time, we successfully enrolled over 1,000 patients in one single quarter. Since its launch, the program has achieved accumulative enrollment of more than 13,000 patients. This quarter, we fortified our special case review mechanism by fully decoding the course of the request review and potential usage response, with real-time display review timeline and the reviewers' satisfaction status. this quarter we fortified our special case review mechanism by fully decoding the course of the request review and potential usage response with real-time display review timeline and the reviewers' satisfaction status This now gives donors clear insight into how their contribution, how their donations are allocated and used. this now gives donors clear insight into how their contribution how their donations are allocated and used This matters have profoundly enhanced the transparency, rationality, and the traceability of funds distribution. this matters have profoundly enhanced the transparency rationality and the traceability of funds distribution And our healthcare business continues strong performance this quarter. and our healthcare business continues strong performance this quarter The eFind platform expanded the collaboration network by partnering with 216 pharmaceutical and contract research organizations. the efind platform expanded the collaboration network by partnering with 216 pharmaceutical and contract research organizations Meanwhile, we initiated services for 125 new programs. meanwhile we initiated services for 125 new programs For the first time, we successfully enrolled over 1,000 patients in one single quarter. for the first time we successfully enrolled over 1,000 patients in one single quarter Since its launch, the program has achieved accumulative enrollment of more than 13,000 patients. since its launch the program has achieved accumulative enrollment of more than 13,000 patients WaterDrop leveraged its massive patient database and elastic digital ability to expand collaboration projects in areas like psoriasis, tumors, and digestive tumors, accelerating the clinical development process of our partners. Notably, in the challenging field of gynecological tumors, quarterly enrollment increased by 130% compared to the previous full quarter average level. The company has also made significant strides in chronic disease. Building on its existing focus on skin disease, respiratory conditions, and diabetic hypertension, the company has expanded its disease coverage into the rheumatology and the immunology. Enhancing digital matching accuracy between patient database and the project library remains a key strategic focus for WaterDrop. This quarter, we upgraded our algorithm medical data structure matching, ensuring enabling thriving performance across multiple high-quality, high-difficulty projects. Through the ecosystem synergy and refined project operations, WaterDrop consistently delivers satisfactory fulfillment quality, striving to sustain order growth. WaterDrop leveraged its massive patient database and elastic digital ability to expand collaboration projects in areas like psoriasis, tumors, and digestive tumors, accelerating the clinical development process of our partners. waterdrop leveraged its massive patient database and elastic digital ability to expand collaboration projects in areas like psoriasis tumors and digestive tumors accelerating the clinical development process of our partners Notably, in the challenging field of gynecological tumors, quarterly enrollment increased by 130% compared to the previous full quarter average level. notably in the challenging field of gynecological tumors quarterly enrollment increased by 130% compared to the previous full quarter average level The company has also made significant strides in chronic disease. the company has also made significant strides in chronic disease Building on its existing focus on skin disease, respiratory conditions, and diabetic hypertension, the company has expanded its disease coverage into the rheumatology and the immunology. building on its existing focus on skin disease respiratory conditions and diabetic hypertension the company has expanded its disease coverage into the rheumatology and the immunology Enhancing digital matching accuracy between patient database and the project library remains a key strategic focus for WaterDrop. enhancing digital matching accuracy between patient database and the project library remains a key strategic focus for waterdrop This quarter, we upgraded our algorithm medical data structure matching, ensuring enabling thriving performance across multiple high-quality, high-difficulty projects. this quarter we upgraded our algorithm medical data structure matching ensuring enabling thriving performance across multiple high-quality high-difficulty projects Through the ecosystem synergy and refined project operations, WaterDrop consistently delivers satisfactory fulfillment quality, striving to sustain order growth. through the ecosystem synergy and refined project operations waterdrop consistently delivers satisfactory fulfillment quality striving to sustain order growth As a result, the digital clinical trial solution income in the third quarter reached CNY 31.85 million, marking a 31.3% year-on-year increase. In the digital omnichannel marketing, we advanced LLM-powered applications in medical patient service scenarios, launching projects in patient health management, knowledge promotion, and digital humans. The company secured a three-year contract with a world-leading pharmaceutical for patient medicine, serving hundreds of thousands of patients and profoundly improving service efficiency and user experience. Now, I will hand over to Xiaoying Xu, our Head of Finance Department, to discuss our financial performance in this quarter. As a result, the digital clinical trial solution income in the third quarter reached CNY 31.85 million, marking a 31.3% year-on-year increase. as a result the digital clinical trial solution income in the third quarter reached cny 31.85 million marking a 31.3% year-on-year increase In the digital omnichannel marketing, we advanced LLM-powered applications in medical patient service scenarios, launching projects in patient health management, knowledge promotion, and digital humans. in the digital omnichannel marketing we advanced llm-powered applications in medical patient service scenarios launching projects in patient health management knowledge promotion and digital humans The company secured a three-year contract with a world-leading pharmaceutical for patient medicine, serving hundreds of thousands of patients and profoundly improving service efficiency and user experience. the company secured a three-year contract with a world-leading pharmaceutical for patient medicine serving hundreds of thousands of patients and profoundly improving service efficiency and user experience Now, I will hand over to Xiaoying Xu , our Head of Finance Department, to discuss our financial performance in this quarter. now i will hand over to xiaoying xu our head of finance department to discuss our financial performance in this quarter

Speaker 4: Hello, everyone. I will now walk you through our financial highlights for the third quarter of 2025. Before I go into details, please be reminded that all numbers quoted here will be non-GAAP, and please refer to our earnings release for detailed information on our financial performance on both the year-on-year and quarter-on-quarter basis, respectively. Hello, everyone. hello everyone I will now walk you through our financial highlights for the third quarter of 2025. i will now walk you through our financial highlights for the third quarter of 2025 Before I go into details, please be reminded that all numbers quoted here will be non-GAAP, and please refer to our earnings release for detailed information on our financial performance on both the year-on-year and quarter-on-quarter basis, respectively. before i go into details please be reminded that all numbers quoted here will be non-gaap and please refer to our earnings release for detailed information on our financial performance on both the year-on-year and quarter-on-quarter basis respectively In the third quarter, the company reported total revenue of CNY 975 million, marking a year-on-year growth of 38.4%, reflecting a strong growth trajectory. By segment, our insurance business generated about CNY 870 million in revenue, at 44.8% year-on-year. Premium service fees excluded and at around CNY 65.66 million, remaining stable year-on-year. Digital clinical trial solutions contributed over CNY 31.85 million, with a year-on-year increase of 31.3%. Operating costs and expenses totaled approximately CNY 861 million, marking a year-on-year increase of 27.1%. This growth rate of operating costs was lower than the revenue growth, further boosting profitability. Operating costs for this quarter reached CNY 475 million, at 39.5% year-on-year, driven by CNY 56.7 million rise in cost of a referral and service fee, along with 32.4 million and 16.9 million increase in personnel costs and the cost of premium consultant fees. Sales and marketing expenses amounted to CNY 243 million, rising 40.3% year-on-year. In the third quarter, the company reported total revenue of CNY 975 million, marking a year-on-year growth of 38.4%, reflecting a strong growth trajectory. in the third quarter the company reported total revenue of cny 975 million marking a year-on-year growth of 38.4% reflecting a strong growth trajectory By segment, our insurance business generated about CNY 870 million in revenue, at 44.8% year-on-year. by segment our insurance business generated about cny 870 million in revenue at 44.8% year-on-year Premium service fees excluded and at around CNY 65.66 million, remaining stable year-on-year. premium service fees excluded and at around cny 65.66 million remaining stable year-on-year Digital clinical trial solutions contributed over CNY 31.85 million, with a year-on-year increase of 31.3%. digital clinical trial solutions contributed over cny 31.85 million with a year-on-year increase of 31.3% Operating costs and expenses totaled approximately CNY 861 million, marking a year-on-year increase of 27.1%. operating costs and expenses totaled approximately cny 861 million marking a year-on-year increase of 27.1% This growth rate of operating costs was lower than the revenue growth, further boosting profitability. this growth rate of operating costs was lower than the revenue growth further boosting profitability Operating costs for this quarter reached CNY 475 million, at 39.5% year-on-year, driven by CNY 56.7 million rise in cost of a referral and service fee, along with 32.4 million and 16.9 million increase in personnel costs and the cost of premium consultant fees. operating costs for this quarter reached cny 475 million at 39.5% year-on-year driven by cny 56.7 million rise in cost of a referral and service fee along with 32.4 million and 16.9 million increase in personnel costs and the cost of premium consultant fees Sales and marketing expenses amounted to CNY 243 million, rising 40.3% year-on-year. sales and marketing expenses amounted to cny 243 million rising 40.3% year-on-year This growth mainly because of the enhanced AI applications, which improved the user identification accuracy and the conversion rate. Based on this, we boosted our traffic investment, resulting in CNY 79 million year-on-year rise in the marketing expenses for the third quarter traffic channels. General and administrative expenses declined 23.7% year-on-year to CNY 84.7 million. Key factors include a CNY 15.6 million reduction in personal costs and the absence of last year's CNY 20.6 million impairment loss, which contributed to the delta decrease. The R&D expenses rose 10.2% to over CNY 58.3 million, with personal costs and cross-server expense and other technical support expenses increasing by CNY 3.2 million and CNY 2.7 million, respectively, compared to the same period of 2024. In this quarter, the company reported an operating profit of nearly CNY 114 million, marking a substantial year-on-year increase of 329.8%. Net profit attributable to the company's ordinary shareholders reached CNY 158 million, up 60.1% year-on-year. This growth mainly because of the enhanced AI applications, which improved the user identification accuracy and the conversion rate. this growth mainly because of the enhanced ai applications which improved the user identification accuracy and the conversion rate Based on this, we boosted our traffic investment, resulting in CNY 79 million year-on-year rise in the marketing expenses for the third quarter traffic channels. based on this we boosted our traffic investment resulting in cny 79 million year-on-year rise in the marketing expenses for the third quarter traffic channels General and administrative expenses declined 23.7% year-on-year to CNY 84.7 million. general and administrative expenses declined 23.7% year-on-year to cny 84.7 million Key factors include a CNY 15.6 million reduction in personal costs and the absence of last year's CNY 20.6 million impairment loss, which contributed to the delta decrease. key factors include a cny 15.6 million reduction in personal costs and the absence of last year's cny 20.6 million impairment loss which contributed to the delta decrease The R&D expenses rose 10.2% to over CNY 58.3 million, with personal costs and cross-server expense and other technical support expenses increasing by CNY 3.2 million and CNY 2.7 million, respectively, compared to the same period of 2024. the r&d expenses rose 10.2% to over cny 58.3 million with personal costs and cross-server expense and other technical support expenses increasing by cny 3.2 million and cny 2.7 million respectively compared to the same period of 2024 In this quarter, the company reported an operating profit of nearly CNY 114 million, marking a substantial year-on-year increase of 329.8%. in this quarter the company reported an operating profit of nearly cny 114 million marking a substantial year-on-year increase of 329.8% Net profit attributable to the company's ordinary shareholders reached CNY 158 million, up 60.1% year-on-year. net profit attributable to the company's ordinary shareholders reached cny 158 million up 60.1% year-on-year At the end of this period, the company held ample cash position of about CNY 3.61 billion. Net operating cash flow remained positive, providing firm financial support for business expansion and technological development. And in summary, during this quarter, we focused on refined management while achieving scale growth. Moving forward, the company will advance with greater productivity and a program and further strong acts to reach a new stage of development. At the end of this period, the company held ample cash position of about CNY 3.61 billion. at the end of this period the company held ample cash position of about cny 3.61 billion Net operating cash flow remained positive, providing firm financial support for business expansion and technological development. net operating cash flow remained positive providing firm financial support for business expansion and technological development And in summary, during this quarter, we focused on refined management while achieving scale growth. and in summary during this quarter we focused on refined management while achieving scale growth Moving forward, the company will advance with greater productivity and a program and further strong acts to reach a new stage of development. moving forward the company will advance with greater productivity and a program and further strong acts to reach a new stage of development

Speaker 1: And ladies and gentlemen, with that, we will conclude today's conference call. We do thank you for joining. Have a good time. And ladies and gentlemen, with that, we will conclude today's conference call. and ladies and gentlemen with that we will conclude today's conference call We do thank you for joining. we do thank you for joining Have a good time. have a good time